M-Shwari deposits drop 44 percent as biting economic hardships take toll

Safaricom shop

A Safaricom Shop located along Kimathi Street as pictured on March 8, 2023.

Photo credit: Francis Nderitu | Nation Media Group

Deposits in mobile lending platform M-Shwari dropped 44.1 percent during the year to March this year to stand at Sh416.7 billion, down from the Sh745 billion recorded in a similar period in 2022, marking the first-ever decline since the platform was unveiled in November 2013.

The decline means that Kenyans on average deposited Sh1.14 billion daily in their M-Shwari savings accounts, reflecting a decline of almost half from the Sh2.04 billion daily savings posted in the preceding financial year.

The disclosure was made by Safaricom in its latest sustainability report which also showed that the value of loans borrowed from M-Shwari increased 6.3 percent during the period to hit Sh91.5 billion up from the Sh86.1 billion booked in the previous year.

During the same period, the value of loans disbursed through Safaricom’s overdraft service Fuliza rose 39.6 percent to stand at Sh701.5 billion up from the Sh502.6 billion disbursed during the year ending March 2022.

The trend points to liquidity handicaps which have resulted in over-reliance on credit facilities to deal with economic hardships.

M-Shwari is a mobile savings and loan service offered to users of Safaricom’s mobile wallet platform M-Pesa and which enables them to open and operate an account through their mobile phones.

The platform offers savers an additional feature dubbed M-Shwari lock savings account that allows users to save for between one and 12 months, earning interest at the rate of up to six percent per year.

M-Shwari loans, on the other hand, are priced at nine percent – being loan fees of 7.5 percent and 1.5 percent excise duty – are disbursed instantly to customers’ M-Pesa accounts once an application is made.

Recent disclosures by the Competition Authority of Kenya (CAK) indicate that M-Shwari tops the list of digital lenders in the country, controlling a 34 percent market share and is closely rivalled by Fuliza which enjoys a 25 percent market share.

Borrowers from both facilities use the cash mostly to meet their short-term needs which include food purchases and paying of bills. Small businesses also use the funds as working capital to restock their wares.

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